Wall Street falls as Nvidia uncertainty hits tech shares

US stocks moved lower on Friday as worries surrounding Nvidia weighed on technology shares, even as a fresh inflation reading kept expectations for Federal Reserve rate hikes in place.

Market Impact

Nvidia shares fell 2.2 percent and were on track for their sixth straight week of declines, marking their longest losing streak since October 2012. This drop followed the resignation of CEO Jensen Huang on Thursday after revelations of his relationship with a businesswoman suspected by the US of spying for Beijing. The Financial Times reported that Nvidia's board has approached British chipmaker Arm Holdings CEO Rene Haas in its search for a successor. Anthony Saglimbene, chief market strategist at Ameriprise Financial, noted that the market is trying to navigate the AI theme without Huang, who served as the primary champion for the technology. The Dow Jones Industrial Average fell 5.36 points, or 0.01 percent, to 52,291.73, the S&P 500 lost 38.87 points, or 0.51 percent, to 7,553.53, and the Nasdaq Composite lost 236.49 points, or 0.93 percent, to 25,129.60.

Sector Performance

The Philadelphia Semiconductor Index dropped 3.7 percent, with Advanced Micro Devices and Broadcom acting as the biggest drags. Neoclouds CoreWeave, Nebius, IREN, and Applied Digital also retreated. The S&P 500 technology index declined 1.6 percent as the worst-performing sector among the 11 major S&P groups. In contrast, Microsoft shares edged up 0.4 percent after a global outage affecting Outlook and Teams began to ease. Meanwhile, the US Labor Department reported that producer prices rose 6.5 percent year over year in October, marking the largest annual gain since November 2022. This inflation data kept expectations firm for a rate hike of at least 25 basis points at the Federal Reserve's December meeting. San Francisco Federal Reserve President Mary Daly and Boston Federal Reserve President Susan Collins both indicated on Friday that tighter monetary policy is likely needed due to high inflation.

Context

Stock markets often react strongly to leadership changes at dominant firms, particularly when a CEO is closely tied to a rapidly growing sector like artificial intelligence. Federal Reserve monetary policy decisions are heavily influenced by inflation data, meaning higher price pressures frequently lead central banks to consider raising interest rates.